Kim Yapchai on Cultivating Culture Through Compliance

I recently had the pleasure of sitting down with Kim Yapchai, Chief Compliance and Ethics Officer at Tenneco, to discuss her excellent program at Tenneco and the best ways to cultivate great corporate culture.

We met in Chicago for an intimate gathering of compliance professionals at Soho House in the West Loop as a part of our Compliance Heroes event series. If you are not familiar with Kim Yapchai, I’ll give you a little background. She is an absolute powerhouse in the industry. Kim has worked in global companies, like Ford, Masco, and Whirlpool, creating world-class programs. More recently, she joined Tenneco, a Fortune 200 company, as CCO. Naturally, Kim was an excellent leader for GAN to spotlight in our CCO Conversations series.

For those of you who don’t know me, I’m Valerie Charles, a white-collar lawyer who first discovered my love of compliance in-house before pivoting to tech. I truly believe that technology is going to change and elevate our profession. Below you can find a highlight reel of my 45-minute conversation with Kim Yapchai. If you are struggling to change the culture at your organization or just need a little compliance motivation to get you through the day—read on.

My Conversation with Kim Yapchai

Valerie Charles (VC): So, we did a little survey before this event and the response was that everybody wanted to talk about cultivating culture through compliance. That's definitely a topic that we all know is challenging, and Kim has some accolades for doing it very well. Kim, what can you tell us about your experience with shifting corporate culture?

Kim Yapchai (KY): I was not surprised that culture came up as a topic. I think it is the hardest part of establishing an effective compliance program. It's easy to put a policy in place. It's easy to put a hotline in place. It's not as easy to change a culture or to elevate it.

A year ago, I joined Tenneco, which acquired Federal Mogul to become a $17 billion, leading, global automotive supplier, with ~80,000 employees and legendary brands like Champion™ spark plugs and Monroe™ shocks. I joined the company because of its strong leadership. Engagement surveys showed that employees valued compliance. If you don’t have that data when you start a new job, there is another easy way that you can do a quick assessment of company culture. Before a training session, send out a quick, anonymous poll using Google Forms or Microsoft Forms with a sticky situation where there is a tension to hit the goals or be compliant. The poll answers will give you and the team’s leader insights into the group’s culture and their decision making and application of company values. With the poll responses, you can easily facilitate a conversation with the team about why they chose particular answers and the consequences of the other answers. Those who chose weaker answers realize that their peers chose differently. If there are any unacceptable answers, the leader has the chance to explain why those are not supported. With this approach, you get a quick culture assessment, help the leader to set the tone, and hopefully avoid some weak decisions in the future.

VC: At GAN we actually have the unique ability to work with over 145 global companies and hear about what's working for them and what's not working for them. I think competition is a great way to advance your culture and, frankly, help you with your training as well. Do you have any tools you use that help facilitate these learnings? 

KY: I agree. Have you heard of a tool called Kahoot™? This tool has increased engagement in training sessions beyond my expectations and now we get requests for sessions. I actually found out about the tool from my kids. Their teachers use it to enhance learning with quizzes, surveys, and games. You use your phone or your computer to vote for your answer and the person who answers the question the quickest gets the most points. It is not expensive.

One of the first times I used the tool, I had planned to ask the quiz questions intermittently through the presentation. After the third question, I switched back to the presentation, and the audience groaned. I could not believe what was happening. The audience was essentially saying, “Please keep quizzing me on bribery.” Amazing!

VC: Totally, and I think the more interactive the better. Have you experimented at all with choose-your-own-adventure? We are currently working on building out some courses at GAN that I’m particularly excited about. 

KY: I read a lot of choose-your-own-adventure books as a child. A few years ago, I applied that structure to compliance in order to emphasize the power of choice. Surprisingly, people began to purposely choose answers that they thought were wrong so they could see what would happen. They could experiment and see the harm that could happen if they made a riskier choice. In an online training course, they might have to take the training again if they get too many answers wrong. With choose-your-own-adventure, they have the ability to experiment and see what would happen in different scenarios. This gives them a better understanding of the impact of their choices.

VC: These days, all I hear about at compliance conferences are the buzzwords—machine learning, AI, data analytics, and predictive analytics and on and on. I guess my question really is, what do you think about this? I mean, or how close are we? How far off are these applications? 

KY: Using data to drive decisions helps you to focus and to prioritize. For example, Tenneco has a smart process for supplier onboarding that is built internally. Approximately 5,000 suppliers were on-boarded in the first few months after launch. By building in risk-based scoring and workflow into the business process, we leverage the data to ensure the riskier third parties get an elevated review. This allowed us to complete third party due diligence with a very small team.

VC: GAN actually takes that approach with conflicts of interest, guests and hospitality, third party diligence, etc. I think that concept, in general, is something that I think is starting to become just more of a tailored approach, so you're not spending the same amount of effort when the risk is sort of inherently different. 

KY: It is important to work smarter, not harder, and to use data to drive decisions. Using data is a stronger approach than simply expressing a potential risk or concern. Most leaders are action-oriented and want to solve problems. Conversations are more productive when you can provide data, interpret it, and offer solutions.

VC: What new initiatives do you have going on that you're excited about?

KY: The newest one is corporate social responsibility (CSR). We are working on Tenneco’s first formal report. We are excited about improving the way we share information externally so that others can better understand the good things we are doing. That is one of the benefits in the compliance field—the breadth of the field allows you to take your role in many directions. You can approach your leaders with ideas that have the potential to improve your brand and your stock price. The compliance program is a major portion of a sustainability report, and, it is another example of data analytics. A CSR initiative can also help leaders better understand their operations beyond compliance, remove cost and improve operations.

VC: So when you come into a new job and you're in a new company and you're a new person, how do you go about getting the people that you need—finance, audit, HR, everybody else—to sort of buy into you and your thing—you and your vision, your goal, what you're looking to change and do?

KY: Step one: Listen. Listen to understand their pain points and learn the business. That is how you are going to win their respect and their partnership. Step two: Determine whether compliance is seen primarily as a value-add or the police. Although the role involves both, I want compliance primarily to be viewed as a value-add and a performance accelerator.

Social media and reputational damage that companies have seen as a result of compliance failures, such as sexual harassment and privacy, is increasing board-level and executive-management-level interest in ensuring an effective, compliance program. Tenneco leaders are an important part of our compliance program. I am fortunate to work with leaders who value ethics and compliance. When we have training sessions, a leader typically kicks off the session by explaining why integrity is important to them. They also share personal stories, such as a time when someone spoke up to them and they valued it, or they spoke up and felt valued.

Audience Member: Kim, can you talk a little bit about the tension, at least that I’ve felt, between doing the right thing because it's the right thing versus doing the right thing because it'll help you the company meet a business objective? But part of me feels like, darn it, they should just do it because it's the right thing to do. So can you just talk about how you sort of dealt with that conflict?

KY: Most employees will do the right thing automatically. For the others, it is important that they understand that the company does not support breaking a law even if it helps the company to hit a goal. There are plenty of examples in the media to illustrate this. At Tenneco, we talk about these tensions openly using case studies called “What Would You Do?”. Using these case studies, leaders establish their expectations with their teams and strengthen the team’s ability to address such situations.

For those who may still have doubt, there is research to support that value of compliance. Ethisphere research shows the stock performance of the S&P 500 versus the World's Most Ethical Companies winners. The winners outperform the others. This is one way to illustrate the new ROI–Return on Integrity. Operating this way helps us to perform better, protect our brands, and earn trust. We also help people to understand the harm to the company if we don’t do the right thing. Money wasted on fines and damages has no return. Those funds could have been used for product development, acquisitions, and bonuses. This makes it easier for employees to understand how they benefit from doing the right thing and from helping others to do to the right thing.

More On the Impact of Corporate Culture

I really enjoyed hearing Kim’s point of view on corporate culture and left the conversation feeling both refreshed and optimistic about the outlook of the compliance industry. Compliance officers have such a unique position within companies and Kim did a superb job highlighting the opportunity that lies ahead. If you would like to read more about culture, I would recommend checking out our blog post on The Value of a Strong Culture.

Another huge thanks to Kim for sharing her years of industry knowledge with us. I can’t express how valuable I think it is for us as compliance professionals to come together and share our successes and our struggles.

If you would like to read more CCO Conversations, we have a two-part interview with Edward Hanover, the outgoing CCO at FIFA. The first post discusses what it was like to build FIFA's first-ever compliance program and the second gets his thoughts on the future of compliance. Stay tuned for more interviews in our CCO Conversations series.